Financial Crisis: US will lose superpower status, claims German minister

German finance minister Peer Steinbrück has slammed Anglo-American capitalism for endangering global stability in its lust for profit and predicted that the US would now be toppled as the superpower of international finance.

Steinbrück: 'The US will lose its superpower status in the global financial system'Photo: AFP

By Ambrose Evans-Pritchard

8:36PM BST 25 Sep 2008

In a remarkable outburst at the German parliament, Mr Steinbrück said the world would never be the same after “Black September”. He demanded a sweeping code of regulations to “civilise the financial markets” and clamp down on speculators.

Mr Steinbrück announced a swingeing eight-point plan to reorder the global markets - which will heighten fears in the City of London of interference by the European Commission.

“The US will lose its superpower status in the global financial system,” he said, predicting a new multi-polar order where power is spread across the globe.

“The financial crisis is above all an American problem. The other G7 financial ministers in continental Europe share this opinion,” he said, a pointed turn of phrase that excludes Britain’s Alistair Darling.

“This inadequately regulated system is now collapsing, with far-reaching consequences for the US financial market and contagion effects for the rest of the world,” he said.

The current single market commissioner – Irish “Thatcherite” Charlie McCreevy – is almost certain to be replaced by a much more dirigiste successor next year.

Senior politicians in France and Germany have in recent weeks called for a radical shake-up of the market system. A powerful EU faction that has always been hostile to the City of London – which is known in Brussels as “the casino” – see this crisis as a rare chance to ram through irreversible changes.

“They want to regulate the capital levels of every firm and partnership, limit takeovers and regulate asset stripping. In short, they want to regulate the Anglo-Saxon version of capitalism out of existence,” said John Whittacker, MEP and UKIP’s economic spokesman.

Mr Steinbrück said the deft response of the world leaders in recent days had averted catastrophe. “Crisis management worked. We did not have a collapse of the international financial system,” he said.

Mr Steinbrück said the drive for short-term profit and huge bonuses in the Anglo-Saxon world was the root cause of the gravest crisis in decades. “Investment bankers and politicians in New York, Washington and London were not willing to give these up,” he said.

Meanwhile, ratings agency Fitch said the vast bail-outs agreed yesterday by the US Congress do not add significantly to America’s public debt of 57pc of GDP since the money is being used to buy assets, which are backed by collateral.

“You can’t just add up these liabilities and treat them the same way as government debt,” said Fitch’s managing director, Brian Coulton.

Germany itself is no longer a model risk. Fitch said the country has a public debt of 65pc of GDP, the highest level within the elite group of AAA-rated nations.